ROADS have al­ways been the sweet spot within the in­fra­struc­ture sec­tor. Since the 2015 launch of Bharat­mala Pariy­o­jana, a cen­trally funded roads and high­ways project, the Cen­tral gov­ern­ment has awarded 4,466 kilo­me­tres of high­ways un­der the scheme till Au­gust 2018, and an ad­di­tional 2,700 kilo­me­tres of new high­way net­work un­der the same is ex­pected to be awarded by the end of 2018, ac­cord­ing to a re­port by rat­ings agency Care Rat­ings.

That’s not all. The re­port noted that the Min­istry of Road, Trans­port and High­ways plans to award 20,000-kilo­me­tre length of Na­tional High­ways dur­ing 2018-19 (FY19) and the con­struc­tion tar­get for FY19 has been set at 16,418 kilo­me­tres, which is 67 per cent higher than the con­struc­tion achieved in FY18. “With elec­tions across states and a pend­ing gen­eral elec­tion in early FY20, we ex­pect more projects, es­pe­cially the ones awarded in FY16 and FY17, to be com­pleted dur­ing FY19,” the re­port noted.

This is good news, es­pe­cially given the lull for sev­eral years. The Na­tional High­ways Au­thor­ity of In­dia (NHAI) has also changed track to award con­tracts through the new Hy­brid An­nu­ity Model (HAM), which is deemed to have less risk for the de­vel­oper as the gov­ern­ment steps in with two-fifths of the project cost. HAM has seen 10 per cent in­crease in share in FY16, when it was first in­tro­duced, to nearly 47-48 per cent in FY18 in terms of length of projects awarded. “This re­con­fig­u­ra­tion in the share of model of im­ple­men­ta­tion of projects has also helped bring down the over­all cap­i­tal re­quire­ment to be in­curred by MoRTH and NHAI dur­ing a year, by at least 5 per cent be­tween FY14-18,” it added. How­ever, risks per­sist. About 20 per cent of the 1,837 projects for devel­op­ment of na­tional high­ways with an out­lay of `6.45 lakh crore are yet to be handed over to a de­vel­oper or con­ces­sion­aire.

“This leaves the con­ces­sion­aire’s cap­i­tal locked into such awarded projects, slow­ing the over­all pace of devel­op­ment,” the re­port pointed out. This, in turn, would mean that projects un­der the en­gi­neer­ing, pro­cure­ment and con­struc­tion (EPC) route, which re­quires lesser cap­i­tal, would evince more in­ter­est go­ing for­ward.

In ad­di­tion, around 26 projects to­tal­ing around 2,700 kilo­me­tres are ex­pected to be awarded un­der the HAM model in the re­main­ing four months of FY19, which in turn is ex­pected to im­prove the award rate for the year. How­ever, the im­ple­men­ta­tion of these projects would re­main ques­tion­able, the re­port stated.